Fact 1: User generated content (UGC) encourage the exploitation of the long tail of search.
Fact 2: User generated links (UGL) encourage the exploitation of the long tail of search.
Tag Clouds have become the design standard for displaying a weighted list of links based on frequency and user input. The links flow juice down to pages lower pages in the hierarchy, throught contextually relevant anchor text therefor they have SEO benefits to large websites.
Are tag clouds just a passing fad?
Yes! I think Tag Clouds could be perceived as a passing fad, in so much as they have become a Web2.0 design standard. Design standards change! Drop shadow effects (Web1.0) replaced by Reflections/Wet Floor effect (Web2.0)
However, tag clouds or label clouds in general provide a dynamic link structure which doesn't require human maintenance and is powered by participation. Perfect if you're business is heavily effected by seasonal variations or driven by pop-culture.
See this example of a Superbreak's new destination cloud. (Built very quickly by Stu - AKA Bluegroove)
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